XRP Drops 18% from Yearly High, Traders Eye Bitcoin Dominance for Rebound

XRP has declined nearly 18% since hitting its 2024 high on Dec. 3, yet many traders remain optimistic about a recovery.

However, this confidence faces a potential challenge if Bitcoin dominance rises further, according to Pav Hundal, lead analyst at crypto exchange Swyftx.

“The real danger right now for highly leveraged XRP bulls is that Bitcoin dominance increases again. A rotation from XRP to Bitcoin would very likely lead to a bloodbath of liquidations,” Hundal told Cointelegraph.

Markets Show Appetite for XRP Long Positions

As of publication, Bitcoin dominance stood at 55.30%, a 5% decrease over the past week, according to TradingView.

Some traders believe Bitcoin dominance may peak between 60% and 70% before capital begins rotating into altcoins.

“We’ve seen a lot of quick twitch buying by retail over the last few weeks, and open interest is now close to double the levels we saw in 2021,” Hundal said, adding that markets have “developed a thirst for leveraged long XRP exposure.”

At publication, XRP was trading at $2.37.

A 7% drop to $2.18 could result in $104.4 million in long-position liquidations, Hundal warned, saying, “It’s starting to look like the market could be approaching euphoria territory.”

XRP had mostly traded between $0.48 and $0.73 throughout 2024 until Donald Trump’s presidential win on Nov. 5 triggered a 431% rally, pushing XRP to $2.85 on Dec. 3.

XRP Open Interest Hits $3.44 Billion

On Dec. 5, XRP’s Open Interest (OI) reached $3.44 billion, significantly higher than the $2 billion recorded in April 2021 during a similar price rally, per CoinGlass data.

Hundal noted that if Bitcoin stabilizes, it “could soothe nerves and spot volumes could pick up again.”

He added, “Funding rates on Binance are not hot, but across other exchanges, they are pretty warm. Anything over 50% on the one-year funding rate heatmap is generally considered pretty exuberant.”